In early May, clearing and custody provider Pershing, a unit of BNY Mellon, announced that Lisa Dolly would step down as CEO after three years in the role. Jim Crowley, chief operating officer, takes over for Dolly on Monday after 37 years with the firm in various roles.

Dolly and Crowley have worked closely together in recent years, even sharing an office. (The firm has been tight-lipped about her departure.) She leaves after three decades at the firm, previously serving as its COO in 2013 before being promoted to CEO in 2016.

Crowley takes over a business that encompasses 1,300 clients worldwide, including 744 registered investment advisors, and $1.8 trillion in assets, $665 billion of which are advisory assets, as of the end of March.

WealthManagement.com chatted with Crowley about his top priorities in the role, the convergence of the advisory and transactional business models, and the firm’s stance on Regulation Best Interest.

WealthManagement.com: What was your first role at Pershing?

Jim Crowley: I started in November of 1982, and the first thing I was asked to do was to work for our head of marketing and sales. I was immediately thrown into the client business. So the fellow that I worked for at the time really had me engaged with helping him talk about and prepare for how Pershing was uniquely positioned to serve this client or that client, which at the time were regional broker/dealers. I think it was the Kool-Aid that I drank in those early days that got me hooked on understanding what the client experience was all about.

WM: What’s your first order of business as CEO?

JC: First order of business is for the people at BNY Mellon and Pershing and our clients to know that there’s a steady hand on the wheel and that there aren’t going to be any sharp turns to the left or to the right.

From an execution perspective, we’re going to stay very focused on this global shift to wealth advisory. We’re going to be very focused on our technology and this integrated, intelligent, open architecture strategy. Third is, how do we create a noticeably superior experience for our clients?

WM: Which business is doing better: clearing or custody?

JC: While we have teams that are serving those market segments, the way that we think about the investments in our company, including the talent and the technology, we think about in a broader sense of who we serve and how we serve them. With the wealth and advisory business—those models are converging, and regulatory regimes are also converging, with Reg BI and states and fiduciary proposals. The advisory model is growing faster than the commission model, so from a growth perspective, one is growing faster than the other, albeit from a different base.

Overall, we are becoming the choice for those large, complex financial services companies as an outsourcing destination: the largest wealth managers, private client services groups, institutional businesses, bank platform businesses, advisory firms, prime brokers.

WM: How you’re seeing the business models converging? For instance, HighTower’s CEO, Bob Oros, recently joined the board of the Financial Services Institute.

JC: FSI is a trade association that long has been dependent upon the broker/dealer community. It has, I think correctly so, opened their doors to advisors that opened their doors to RIA franchisees because they recognize that it’s in our collective interest. Whether you’re an RIA or broker/dealer, we should be serving the best interests of the clients first. It creates efficiency, drive for scalability, productivity into their operating models, and that frankly is what our desire is. What’s changed is the client business model, and we’re going to stay on this track.

It’s a great opportunity for Pershing to support our clients with that other transformation—which is serving advisors away from the grid, so to speak, and serve on a platform of services that they deliver for a fee rather than a commission and a grid transaction.

WM: In a conversation a couple years ago, you said you were seeing a trend of hybrid advisors closing their own RIAs to join their broker/dealer’s corporate RIA. Are you still seeing that?  

JC: Has the trajectory been as steep as I would’ve thought? No. Do I still believe it? Yes. If you don’t have professional management behind your firm, it’s extremely difficult to grow your business. It’s extremely difficult to step into an SEC or state regulatory exam. It’s extremely difficult to maintain your technology stack. At a point, it makes all the sense in the world to partner with the people that you know and with the brand that your clients know and use that as your operating platform.

I think over the next three to five years, you will see more and more firms, whether they be RIA firms or broker/dealers, start to become more dependent upon enterprise technology platforms. Tech’s changing all the time. The regulations around it are changing all the time, and you should not want that as a burden that you’ve got to carry into the future. You should want to figure out, ‘Well, who is really on top of the technology? Who is really partnering with scalable commercially resilient businesses in order to provide those solutions?’ It’s going to be the larger firms.

WM: There’s been a lot of hemming and hawing over the SEC’s Regulation Best Interest. What’s Pershing’s stance on it? What are you doing to prepare your clients for it?

JC: I don’t think they’ll be too much hemming and hawing. I really think that firms will embrace it because, what is there to argue about making certain that their client’s best interests are first? You can argue about the challenge of disclosures. It’s going to be challenging to disclose potential conflicts. You can hem and haw about implementation timelines and expenses, but the principle itself is hard to knock down.

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